Navy to bulk buy biofuel

Ag Dept program will cover any price differential with petroleum

Navy Lieutenant Commander Frank Kim holds a glass container with algae based biofuel, left, and a container of diesel fuel, right, currently used in ships. The algae based fuel is being tested in the Self Defense Test Ship, formally a destroyer, the USS Paul F. Foster, at Naval Base Point Loma.
— Howard Lipin / San Diego Union-Tribune

Navy Lieutenant Commander Frank Kim holds a glass container with algae based biofuel, left, and a container of diesel fuel, right, currently used in ships. The algae based fuel is being tested in the Self Defense Test Ship, formally a destroyer, the USS Paul F. Foster, at Naval Base Point Loma.
— Howard Lipin / San Diego Union-Tribune

The Navy said Wednesday that it is moving “at a pretty good clip” toward making regular purchases of biofuel for its warships and jets by 2015.

Secretary of the Navy Ray Mabus announced a joint “Farm to Fleet” venture with the U.S. Agriculture Department that will make fuels based on grain, algae or cooking grease part of the Navy’s regular buying program.

“This effort marks the start of the ‘new normal,’ where drop-in biofuels will be fully integrated with our regular fuel operations,” Mabus said during a phone conference with reporters.

The program will start with a bulk fuels solicitation in 2014, with deliveries expected in mid-2015. Mabus said the Navy wants jet and marine diesel biofuels in 10 percent to 50 percent blends with conventional petroleum.

At a 10 percent blend, it would equate to 70 million gallons, the Navy secretary said.

The big question is at what price.

The Navy’s Great Green Fleet demonstration off Hawaii last summer was undercut by complaints from Congress that the “green gas” used by the warships and aircraft cost at least $15 a gallon — expensive compared with the $4 a gallon the Pentagon pays for regular fuel.

The Navy and Ag Department on Wednesday indicated that usable biofuels will be available for less than $4 per gallon in three years.

That’s based on a $20 million federal investment made under the 1950 Defense Production Act to underwrite four biofuel companies. A second round of funding in mid 2014 is expected to help those companies begin manufacturing.

The Navy expects to get 170 million gallons a year from that partnership starting in 2016.

While the Farm to Fleet initiative is separate, Mabus said, “It will help make the transition from where we are today to where we can get to.”

Funds from the Agriculture Department’s Commodity Credit Corporation will assist, providing up to $161 million over three years to cover any difference between the Navy’s cost for biofuel and conventional diesel.

Outside experts have been skeptical of the entire effort.

In a March article in the Air Force’s Strategic Studies Quarterly, Navy Capt. Ike Kiefer argues that biofuels have problems just like petroleum.

“Biofuels are subject to both oil and agricultural market forces and are at the mercy of weather as well,” Kiefer wrote. “Biofuel prices have proven as volatile as oil prices and are likely to be more so once subsidies end.”

Mabus has been pushing the Navy toward biofuels since taking office in May 2009.

The Navy secretary says dependence on foreign oil is expensive when prices spike and forces the United States to depend on unfriendly countries for supply.

He wants to deploy a biofuel-burning carrier group in 2016 and require the Department of the Navy to get half of its energy from alternative sources by 2020.

“We absolutely have to have — particularly in this constrained budget environment — a stably priced, domestically produced alternative to fossil fuels that do spike just on world crises,” Mabus said Wednesday.

Every time the price of oil goes up $1 per barrel, it costs the Navy Department an extra $30 million, he added.

Agriculture Secretary Tom Vilsack said another benefit will be a boost for farms in the nation’s heartland.

“This is a big opportunity for rural America to continue to step up for our country,” Vilsack told reporters.

“It disproportionately sends its sons and daughters to all of the armed forces, and we need a revitalized rural economy to ensure that those young men and women still have opportunities (in) their home areas when they complete their service.”

The Agriculture Department and Navy will host an industry conference on Jan. 30 in Washington, D.C., where stakeholders can learn more about the Farm to Fleet program.